Thursday, November 24, 2011

The Future of Shopping – GEC Business Review

by Jess Lee

Like normally what is happening out there … you enter a shop, finding something you intend to purchase. You probably write down the product name and manufacturing detail, and later, you go home (or searching alternatives through the Internet via your smartphone on the spot) and order it through the Internet. As a result, you probably get a better price (as usual), and you may have avoided from carrying the goods and sales tax!

Doesn’t it sound like the shop is just a show room? It’s only the beginning!

Soon or later, it will be tough to define e-commerce. Let’s further to elaborate the above mentioned case, do you consider it an e-commerce sale if you go to a shop, you find that the product, but you will use your smartphone to find a lower price at another place. Then, you order it electronically through the Internet for a “free shipping” pickup. Believe it or not, experts have estimated that digital information already influences about 50% of in-store sales, and that number is still growing.

According to Forrester, a global renowned independent research firm, estimates that e-commerce is now approaching US$200bil in revenue in the United States, and accounts for 9% of total retail sales, up from 5% five years ago; 10% in the United Kingdom, Asia-Pacific (3%), and Latin America (2%). Globally, digital retailing is probably headed toward 15% to 20% of total sales. What’s more, much digital retailing is now highly profitable. Amazon’s five-year average returns on investment, approx. 17% whereas traditional discount and department stores average 6.5%.

The advantages of digital retailing are increasing as innovations indeed flood the market. Amazon, for instance, has already earned valuable patents on its keystone innovations like “1-Click checkout” and an online system that allows consumers to exchange unwanted gifts even before receiving them.

Probably, consumers are staying in front of the shopping revolution. Studies estimated, by 2015, almost half of every mobile phone in the Asian regions will be a smartphone that connected to the internet, and an estimated 20% of Asian will use tablets such as the iPad.

The emerging age of Generation Y (Gen-Y) will likely cause a change in consumer demand and spending habits, according to recent PricewaterhouseCoopers report. Major change in retail format that could hit the retail industry before the 2015. Retail stores that are able to adapt to the new consumer demographics will succeed while those unable to adapt will doom to failure.

At present, probably retailers are bit lagging in responding to the fast-growing digital age, but, these organizations will need to attract and retain innovative people: those imaginative, tech-savvy, often young individuals who are able to swing new ideas every day. Inevitably, they will have to upgrade their recruitment efforts in due time. 

To survive in the next decade, retailers should adapt to a number of changing formats, there are not limited to:

1. The Gen-Y consumers contains a tech-savvy and more diverse group that holds different values.
2. The “one-stop” approach of the retail format will likely obsolete. Retailers able to respond to individual tastes will become dominant.
3. The Gen-Y consumers will be more brand- or quality-driven than quantity. Mass production models will flop.
4. The technology to keep personal contact with customers through computer/mobile devices will be important to maintain quality of service and product, and customer loyalty.

Isn’t it making any sense? The future of shopping should deliver the sort of revolution in customer expectations and buying experiences that comes along every decade or so. In fact, the digital and physical retail arenas complement each other instead of competing, thus generating incremental sales and lowering costs simultaneously. As a result, consumers like us are likely to see more new ideas being implemented as employees propose innovations of their own. In future retail environment will be ever-competitive, retailers that learn to take advantage of both will likely to outperform their competitors.

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